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Debenture

DEBENTURE

[Latin, Are due.] A promissory note or bond offered by a corporation to a creditor in exchange for a loan, the repayment of which is backed only by the general creditworthiness of the corporation and not by a mortgage or a lien on any specific property.

Debentures are usually offered in issues under an indenture, a document that sets the terms of the exchange. A debenture is usually a bearer instrument. When it is presented for payment, the person in possession of it will be paid, even if the person is not the original creditor. Coupons representing annual or semi-annual payments of interest on the debt are attached, to be clipped and presented for payment on their due dates. They may be deposited in, and collected by, the banks of holders of the debentures, the creditors of the corporation.

A convertible debenture is one that can be changed or converted, at the option of its holder, into shares of stock, usually common stock, at a fixed ratio as stated in the indenture. The ratio can be adjusted in light of stock dividends; otherwise the value of converting the debt into securities would be worth less than retaining the debenture until its date of maturity.

A subordinate debenture is one that will be repaid only after other corporate debts have been satisfied. A convertible subordinate debenture is one that is subject or subordinate to the prior repayment of other debts of the corporation but which can be converted into another form of security.

A sinking fund debenture is one whereby repayment is secured by periodic payments by the corporation into a sinking fund, an amount of money made up of corporate assets and earnings that are set aside for the repayment of designated debentures and long-term debts.

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"Debenture." West's Encyclopedia of American Law. . Encyclopedia.com. 20 Jul. 2017 <http://www.encyclopedia.com>.

"Debenture." West's Encyclopedia of American Law. . Encyclopedia.com. (July 20, 2017). http://www.encyclopedia.com/law/encyclopedias-almanacs-transcripts-and-maps/debenture

"Debenture." West's Encyclopedia of American Law. . Retrieved July 20, 2017 from Encyclopedia.com: http://www.encyclopedia.com/law/encyclopedias-almanacs-transcripts-and-maps/debenture

debenture

debenture (dəbĕn´chər), document acknowledging indebtedness. In Great Britain a debenture is practically the same as a bond, and debenture stock is similar to preferred stock. In the United States the term is usually employed for a corporation certificate without special security, such as a mortgage, to back it up. Debentures are generally issued by service corporations that have few mortgageable assets, or by blue-chip companies that are stable enough to invite unsecured loans. In a typical debenture, the corporation promises to repay the principal either periodically or on a specified date, and with regular interest. The term is also used for a document by which a government is bound to pay a creditor money due after some condition has been fulfilled.

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"debenture." The Columbia Encyclopedia, 6th ed.. . Encyclopedia.com. 20 Jul. 2017 <http://www.encyclopedia.com>.

"debenture." The Columbia Encyclopedia, 6th ed.. . Encyclopedia.com. (July 20, 2017). http://www.encyclopedia.com/reference/encyclopedias-almanacs-transcripts-and-maps/debenture

"debenture." The Columbia Encyclopedia, 6th ed.. . Retrieved July 20, 2017 from Encyclopedia.com: http://www.encyclopedia.com/reference/encyclopedias-almanacs-transcripts-and-maps/debenture

debenture

debenture voucher for a sum due XV; †certificate of a loan made to a government XVIII; bond issued by a corporation acknowledging indebtedness for interest XIX. mod. use of L. dēbentur are owing or due, 3rd pl. pres. ind. pass. of dēbēre owe (see DEBT), occurring as the first word of a certificate of indebtedness (XIV); there has been assim. of the final syll. to -URE.

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"debenture." The Concise Oxford Dictionary of English Etymology. . Encyclopedia.com. 20 Jul. 2017 <http://www.encyclopedia.com>.

"debenture." The Concise Oxford Dictionary of English Etymology. . Encyclopedia.com. (July 20, 2017). http://www.encyclopedia.com/humanities/dictionaries-thesauruses-pictures-and-press-releases/debenture-0

"debenture." The Concise Oxford Dictionary of English Etymology. . Retrieved July 20, 2017 from Encyclopedia.com: http://www.encyclopedia.com/humanities/dictionaries-thesauruses-pictures-and-press-releases/debenture-0

debenture

de·ben·ture / diˈbenchər/ • n. (also debenture bond) an unsecured loan certificate issued by a company, backed by general credit rather than by specified assets.

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"debenture." The Oxford Pocket Dictionary of Current English. . Encyclopedia.com. 20 Jul. 2017 <http://www.encyclopedia.com>.

"debenture." The Oxford Pocket Dictionary of Current English. . Encyclopedia.com. (July 20, 2017). http://www.encyclopedia.com/humanities/dictionaries-thesauruses-pictures-and-press-releases/debenture

"debenture." The Oxford Pocket Dictionary of Current English. . Retrieved July 20, 2017 from Encyclopedia.com: http://www.encyclopedia.com/humanities/dictionaries-thesauruses-pictures-and-press-releases/debenture